Q2 19/20

Nov 11, 2019

Good day, and welcome to the Indian Hotels Company Limited's q two for your twenty earnings call being hosted by Mr. Puneet Chattwal, MD and CEO, IHCL and Mr. Giridhar Sanjeevi, EVP and CFO, IHCL. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. At this time, I would like to turn the conference over to Mr. Giridhar Sanjeevi, EVP and CFO, Ayat Siyal. Please go ahead, sir. Hi. Good evening to all of you who have joined the call today. Many thanks for joining. I think I take the opportunity of welcoming all of you. And what we will go through now is a short presentation on the performance of the company and the results. And to start with, I pass the call to Mr. Puneet Chitva, Managing Director, to start the presentation. Thank you. Good evening, everyone, and thank you for joining so late in the evening. I would like to begin with sharing a news that as we are having this call, we are having a religious ceremony at what will be the Taj Thirupathi. We are preparing for the opening, and the hotel will open anytime between the fifteenth of this month to the end of the month depending on the opening certificate. This is 106 room properties with four food and beverage outlets and it is in line with our strategy of strengthening our presence in the religious tourism sector. And that too now with a Taj property, which we are very proud of. Moving on our key highlights. On the aspiration to execution, short reminder, we said we will grow our margin by 800 basis points as a part of aspiration 2022, which we unveiled last year in February, that we will add 15 new projects to our pipeline every year and have a balanced portfolio, which is 50% on fee based business and 50% which is owned or leased properties. So where do we stand on that? I think it's a journey which you can see, especially in the results of the last full year, where the revenue increased to 4,600 crores, EBITDA to almost INR 900 crores, EBITDA margin came to 20% and we almost reached INR 300 crores in profit after tax. Return on equity almost of 7% coming from a negative of seven percent four years ago and a net debt to EBITDA coming down from 6.5% to 2.1%. And a portfolio of hotels, which we stood at 158 when we announced the aspiration, then finished last year at 179. And this is something which we've already communicated that we are at 192 properties, of which 151 are in operation and 41 are in pipeline. And we are well in within our target and our guidance of opening a hotel every month. If we look at the last eighteen months, which is the last six quarters, and we try to focus this time a bit on what we have achieved in the last six quarters. We have signed 36 new agreements, well distributed over our three mainstream brands that's Taj, Vivanta and Ginger. And Selections, as the name suggests, is a collection of certain hotels, which do not really fit into a brand, but are very nice properties to have like the President in Mumbai or the Ambassador in Delhi. There also, we've been able to add four assets, including the famous Siddharth Goa. And then we are opening in Jaipur in December with Devi Rasan. You all are aware of the Kanot in New Delhi and another property in Jaipur. So I think 36 contracts signing of two contracts a month and with the target of as of this year opening hotel every month seems quite imminent. If we then further go on what we have done in the openings, then you will see that 15 hotels are to open in this year, which we may not achieve because certain openings always get delayed, but definitely the 12 will be achieved. So Ginger, Dwarka, Sanam, Madhra, Patna, Siddharth Siddharth as selections and Agra as the Taj Convention Center have already opened. And we are hoping to open, as I said, Thirupati very soon, the Taj Convention Center in Goa in the February, the Jumeirah Lake Towers in Dubai in December, the Kannot in Delhi, the Deviratan in Jaipur as well as three more Ginjas are expected to open over the next five to six months. So we are quite confident that in all, we will be able to open 12 of these 15 that we are showing you on this chart. Going forward, if you also look at the last six quarters, every quarter consistently, we've been able to expand our margins. And although the impact in this quarter looks very high, it's a little bit assisted also by the new accounting standard, which makes your increase in margins look very green and the increase in PAT look a little less green. So it balances out in the end. But we are quite pleased with the performance because as you all know that Q2 is the weakest quarter historically and has always been for the industry in general and IHCL in particular. When we look at the Q2 RevPAR growth compared to the industry, the industry on an all India basis, this is based on data we have received from STR Global. The RevPAR was at 3254% RevPAR growth was 3.1%. We have had a RevPAR of 4,833, this is all India basis only, and a RevPAR growth of 3.9%. When it comes to also certain key markets, it's very important for us because our footprint in some of these markets is very significant, especially in Mumbai, Delhi, Chennai, also Bangalore and Hyderabad is quite significant. Actually, Bangalore would have been much higher, but our flagship and trophy asset, West had certain rooms out of order as we were renovating them, especially the suite offering in West End, which is now come online and is beginning to show very positive results. And we've been very focused on driving our market share. As the top line growth was not coming to the extent that we would have all liked it to, one of the key levers we had was how to improve our market share. So I think what we've been doing is in the key markets, we've been gaining market share from our competitors. At the same time, as we had announced in February 2018, we have been very focused on cost optimization. We said the 800 basis point, like almost 50% will come through top line growth and 50% will come through cost optimization as the scale that we are aiming for does not necessarily mean that there is a direct correlation in the increase in costs, especially on the corporate overheads. And as you can see, the corporate overhead start looking now already 125 basis points lower as a percentage to the revenue versus the same quarter last year, and that is coming also because of the scale. So you keep your expenses under check as a percentage to start then going down on the total revenue if that keeps increasing. Same is with the raw material costs, which has come down. And also, we have taken on significant projects as one of the highest expense on an increased basis. The highest increase in expenses is in Heatlight and Power, and we are very pleased to see that we have been able to keep this expense also under strict control. When we further move on to our brandscape, which is a very important part of our growth strategy, you are all aware that we launched Arma Stays and Trails. We have 12 operational bungalows, and we have six more to open over the next few months. Ginger 20% of the Ginger Lean Lux portfolio has been already repositioned to the new ginger positioning, to the new look and feel of the brand. And same thing has happened with nine Vivantas have already so nine gateway properties have migrated to Vivanta successfully, 10 more will follow before the end of this financial year. Further, we relaunched the Chambers value proposition. We relaunched our Salon brand in the new and now as the brand name, and we tied up with AB InBev to do Seven Rivers, which is our micro brewery brand together with AB InBev, which we have an exclusive right with them. And the first one will be opening in Paj on the MG Road in Bengaluru. In summary, I would say that Indian Hotels has been able to deliver strong performance across all parameters. It's industry leader in development momentum in terms of signing new hotels. As you know, we have signed already this year in the first six months 14 hotels totaling 2,000 rooms. And as I showed earlier, 36 new properties added to our pipeline in the last eighteen months without using our capital except for the one that is the Kannot in New Delhi. We are on track to open more than a hotel a month in this financial year. We have had six consecutive quarters of EBITDA margin expansion, which is in line with our aspiration 2022 as highlighted to all of you. We have higher Q2 RevPAR growth recorded compared to the industry. Our RevPAR performance is positive compared to competition in all the key markets. We are focused and we remain extremely diligent on cost optimization despite launching new brands, despite aggressively marketing our existing brands by containment of costs and corporate overheads, repairs and maintenance and heat light and power costs. Having said that, that does not mean that we are not adding talent. We just added a Head of Digital, who we have hired from TCS, who joined us this month. And Digital is an important part of our strategy and our industry taking us forward. And we remain very focused on unlocking the value of all brands under IHCL. So I think this actually makes a good summary. And now how this translates into financial performance that you can see that our revenue for the quarter increased by almost 5%. We touched INR 1,000 crores, which we have never touched in the last ten years or even earlier. Our EBITDA increased by 57% to 182 crores. Our EBITDA margin was up almost 600 basis points to 17.65%. As I said before, this is one of our weakest quarters or not one of our it is the weakest quarter among the four quarters. And our PAT has had a 76 crore swing on this quarter versus the same quarter last year. With that, I think we can also see what I just mentioned about the last ten years. If you look at this chart, on the top, you will see the in the light blue highlighted, the top line that we hit 1,000 crores. And it's quite a good jump because already last year was a good year. But if we go back a few years, it is showing almost a 15% to 20% increase over where we were a few years ago. Our expenses are not showing a 15%, 20% increase. At the same time, that is what is driving our EBITDA margin, including our operating EBITDA margin. We were PBT marginally negative, but this is because of the new reporting standards. If we had the old ones, it would be positive and the PAT was also positive. With that, we can now move on to the first half of the year. And if we looked at the first half, the first six months of this year, we hit for the first time INR 2,000 crores in revenue, almost INR 2,100, a 6% increase and EBITDA of INR $3.92 crores, which is 62% increase over last year and EBITDA margin of 18.8%, a six fifty eight basis point increase and a PAT, which has gone up 7.7x, of course, aided by one or the other tax reversal, but we also get one or the other negative impacts in some quarters or in certain years. So this time, it's been positive for us. And again, if we look at here, the first half performance, as you can all see that we never had INR 2,000 crores in revenue. So our total income was almost INR 2,100 crores and our EBITDA touching INR $3.92 crores and a margin of INR 18.8 a PBT of INR20 crores and a PAT of INR77 crores. With that, I would like to hand over to my colleague, Mr. Sanjeevi, who is the Chief Financial Officer. Over to you, Giri. Thank you. Thank you. I think continuing from where Puneet kind of left off, I think what we have tried to summarize in a very simple way is the kind of summarized impact of the performance with pre in days and post in days. I think very clearly you see this summarizes the previous slide in terms of growth of revenues of 4.8% on a pre in days basis. EBITDA very clearly at 17.8%, EBITDA margin growth at 1.5% and an operational EBITDA margin growth of 1.16%. Exceptional items were marginal at this point of time. And profit after tax INR71 crores is what we reported in Q2 and on a pre in days basis, 82 crores actually. So I think this summarizes in a simple way, the pre and post in days impact. Going forward, I think you will also see the detailed consolidated report. I think what is good to see is that in terms of expenditure focus, while revenue grew by 4%, I think the expenditure focus has always been there actually. And that has resulted in the leverage. And I think that is the most important thing. If many of you remember, I think we have always been saying that we will do everything we can in terms of making sure that we report an operating EBITDA leverage actually, and that is something that we have been able to do. Depreciation and finance cost reflects the impact of the new accounting standard. Exceptions, we don't have any other item. And as stated, we had due to the new tax regime, a reversal in terms of deferred tax liability and that is reflected in the final number of INR71 crores for the post Indes number. In terms of exceptionals, there's nothing much to report. We just we had a sale of flats included. There's about INR8 crores or so. Other than that, there's nothing exceptional in the included. And then we move on to H1. H1 again, I think what we see here is that as Puneet mentioned, we crossed INR 2,000 crores in terms of top line. We continue to show the EBITDA margin expansion of 2.3% and an operating EBITDA margin expansion of 1.24%. We continue to again once again no exceptionals and profit after taxes was about INR77 crores for the quarter actually. Similarly, I think the consolidated P and L for H1 shows a similar story in terms of tight control on costs and managing leverage and also reflects the final performance of INR77 crores in terms of the PAP Act. Consolidated exceptionals, we didn't have much. In terms of the, what do you say, the network revenue, I think F and B revenue grew in domestic by about 3.6%, room revenue grew by 8.7%, Repal grew by 3.9%, very strong focus in this quarter in terms of driving occupancy growth actually. And international also did was fairly stable in terms of overall international operations. U. S. Did okay. St. James Court did very well actually. So overall international operations were kind of stable and accretive. If I look at the H1 revenues again, I think you will see this very clearly that the international operations are strongly accretive in terms of RevPAR. And in terms of domestic, we continue to drive room revenue growth and to drive the performance actually. Moving on to stand alone very quickly. We had what do you say, stand alone key indicators was INR $6.25 crores of top line. EBITDA was about INR 148 crores. Again, standalone reflects the EBITDA margin expansion of 0.96% on an operating basis, and it includes about INR8 crores in terms of sale of plants. Profit before exceptional items and taxes were about INR 37 crores. Profit after tax was INR 119 crores. Similarly, on an Ind AS basis, we continue to reflect the impact of Ind AS across the line and overall profit after tax of INR119 crores. The detailed P and L also reflects the focus in terms of not just working on the revenue levers, but also on expenditure control, which is driving the EBITDA margin expansion and an overall PAT of INR190 crores. Exceptional items, think as far as Q2 is concerned, I think the only item to note is that like we have done for the last three years, whatever was the cash loss of the peer, we have kind of provided for it in standalone of INR27 crores. I think the good thing is that the peer losses have come down in the quarter of INR31 crores to INR27 crores. And that is getting reflected in the half year number as well. In terms of H1 as well, the total revenue was INR1233 crores and EBITDA was INR293 crores. Once again, it showed a margin expansion of 1.7% and operating margin expansion of slightly under 1% actually and includes the EBITDA for sale of Platts of about INR33 crores is included. H1 profit before exceptional items and tax was about INR73 crores and profit after tax was a strong INR141 crores actually. Once again, showing the impact on Ind AS116, which you can look up. Stand alone reported P and L, again, kind of reflected the leverage and the overall performance of INR 141 crores. Exceptional items for H1, as I said, I think we didn't have any derivative contract, what do you say, losses. And we had a profit on sale of Tamil Nadu flight kitchen, the Taj Maharash flight kitchen shares actually. And the peer losses clearly reduced from last year, INR32 crores to INR26 crores. So that continues our effort in terms of improving the performance there. In terms of acquisitions and monetizations, I think we have just announced the commercial closure of the first transaction on the GIC platform. Sale of residential apartments continued and simplification and monetization, Parag Glass Light Kitchen, we completed it during the quarter. As far as the net debt position is concerned, I think we continue to focus in terms of position. While it went up marginally by about INR120 crores or so, there's nothing unusual. The net debt to EBITDA clearly went down from 2.1 to 1.92. And the net debt to equity remained stable at 0.43 or so. So I think this is an area where we continue to focus in terms of making sure that the net debt position is on the control. That's it in terms of the performance update and open for questions. Hello? Can we now open for questions, please? Yes. I think so. So you want me to take the questions on the audio call? Yes, please. Yes. Sure. Thank you. Participants, if you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using the speakerphone, please make sure your mute button is turned off to allow your signal to reach our equipment. A voice prompt on phone line will indicate when your line is open. Please state your name before posing your question. Again, press star one to ask a question. Participants, your line is open. Please pose your name before taking your question. Hello? Yes. Hi. Good evening, everyone. This is Satyam. Puneet, the first question that I had was on the demand trends. We have seen the first half be a little weak, but based on checks, we gather that number is looking little stronger than first half, and October was continued saw continued weakness because of the large number of holidays, etcetera. So, you know, do you think October number put together has seen some kind of an improvement? Because maybe that's a better way to look at it, seeing the both both the months together. So is that together at least showing some kind of improvement in the RevPAR trajectory versus the first half? And if so, then, you know, what is driving that improvement? Is it coming from some bit of improvement in the corporate bookings as well, or is it all leisure driven? Yes. Satya, thank you for taking that up. Because you are right, we have to look at October, November together as October had both the Shara and Diwali. So obviously, the first ten days of November are much looking much more positive than last year. So if you take the trend of the last forty days put together, there is obviously a positive RevPAR growth. At the moment, we are seeing most of the growth is still driven by volume than by rate. But the impact of rate should come at certain point of time because the GST reduction has also happened as of October 1. So by the time you start seeing a reflection of improvement in rates and also the some of the plans and changes announced by the government, this should help in the rate improvement. And a very normal trend as both occupancy and rate were under pressure. Now I don't think occupancy is anymore under pressure, and that's when the rates tend to increase. Now the big question is, can I say when they will increase? I don't have the answer to that today. But, definitely, by November, we should know more because we've just come from a, from the holiday period, and so the comparison is not there. We need at least ten, fifteen more normal working days to give some form of guidance. And Puneet, on the F and B revenue side, you showed on the slide that you had 3.6% Y o Y growth in the quarter and which then compares very well versus the other luxury companies who have reported so far, who have all seen 7%, 8% decline Y o Y because of the MICE weakness. So any comments there in terms of whether you saw any weakness from the MICE side as well? Or what helped you avoid that kind of a decline in F and B? I think I mentioned that in my presentation, the one of the things we have remained focused on is driving market share. The demand is not been as strong as it was the same time last year. That would be fair to say. But our market share growth has been very good, especially in the key markets where almost 50% of our portfolio is. So 50% of our portfolio is in Delhi, Mumbai, Rajasthan, Goa, etcetera. So and in these markets, we are almost market leaders with iconic assets, and that has been helping us either maintain or increase share. And if you are able to maintain or increase share, that's one. And second is our growth in our portfolio. So if you add a Sedat Bagoa or a Taj in Agra with two forty rooms, that also helps you to increase the revenue. Although both our management side only accounts in the fee side, but it also is giving us a better footprint and a better opportunity to market in different to go to market with different kind of offerings that we have today versus before. And last question from me on the Pune Hotel acquisition that you've announced. Are you in a position to share any details on which property this is or the how many rooms does it have? What kind of chain scale is it positioned at? If it's an operational property, what's the brand now and what will be the brand once you take it over? Any details on this? I think we will come back in terms of the details because the agreements are yet kind of not yet done actually. We've just done the commercial closure. I think we will announce it maybe in a month's time or so in terms of further details on this. I think it isn't I think all I can say is that it's an operational property. I think that's it. Okay, great. Thank you and all the best. We will now take our next question. Participant, your line is open. Please go ahead. Hi, sir. Good evening. This is Nihal here from Edelweiss. So my first question was, could you share what the current pipeline of management contract rooms are at this point in time? So we have a bit over 5,000 rooms in the pipeline, totaling almost 40 properties or 41, to be precise. And they are divided then over different brands. And that is then like a significant acceleration the ginger brand in terms of pipeline, which is good because it's a high margin business for us. There are a couple of properties in Selections. There are a few contracts. Know, Vimanta has seven selections as three. 13 properties in Ginger totaling over 1,100 rooms and 15 are starts with over 3,000 rooms. 15. That's that's very helpful. And if I remember right, this number was 4,000 at the start of the year, which has now increased to 5,000. Correct. Five thousand four four hundred to be precise because some of the hotels have been conversion. So a hotel like Siddharth Agua, the day it is signed, it went online. So it never reaches the pipeline. The same is for Agra. The day it was signed, it opened. So although when we count hotels number of hotels signed, we count those rooms, but they immediately opened. So and some other openings, because they were in the pipeline, that that that keeps happening. So it's not exactly the same number that you signed. You have always in the pipeline. It's a question of new construction versus conversions. So Ginger in Dwarka was also a conversion. Okay. So then just a a later data to this will be how many rooms have we opened in the last six months under management contract? In the last six months, we have opened four hotels, and all of them are under operating agreements, and this is totaling 765 rooms. But the majority of our as I said before, there are eight openings that we expect to have in the next five months. And it's also the right time to do that because as we know, the second half is stronger. So we also tend to have openings. For example, Dubai property, you don't want to open in July or August or September. It's not going to work. So we are targeting an opening in December because December and January are the best months for Dubai. And even February is strong, but you don't open hotels in Dubai in May, June, July and August. So similarly, in some other destinations like this, that the openings are also higher just like the revenue is higher in the second half of the year. You so much, Puneet. Puneet, the second question was on the CapEx front. Obviously, we see that there has been a reduction in the CapEx compared to last year. First, I just wondered, the current guidance still between INR300 crores to INR400 crores, especially in the light that we will be investing INR250 crores in yearly investment growth Yes. Next We will continue to invest in our strategic assets and putting our kind of market strengthening our market position, in this kind of macroeconomic circumstances. So there are certain projects where also the CapEx amounts will be kind of coming our way in the next five months. Yes. And I think the other way of looking at is to sort of look at the overall net debt. I think what we've always guided is that net debt this year will be constant actually. We don't expect net debt to reduce nor kind of go higher actually. So that's the way we kind of manage. And it depends where the EBITDA comes, the absolute amount. If it is a bit higher than last year, which it seems as we look at the first half, we don't know how the second half would be. But if the second half was the same as last year and we had the first half, the net debt to EBITDA will go down further. Yeah. Absolutely. So so if I understood right, we'll still be able to manage to maintain that number of INR300 crores to INR400 crores including this investment in ELEL, or maybe we could add on to that number? The yearly investment, you know, the definitive agreements have to be done, but there will be no investment of significant amount in this financial year or the next or the next. It will be divided over several years. So it's a it's a the the the heads of terms that we have agreed without having signed the definitive agreements have a payment schedule which goes over several years. Absolutely. Wait. Last question from my side is that last quarter, I think we are looking at important you asked this sorry. It's very important you asked this question because I think that kind of information we don't disclose when we disclose to SEBI. So I think for all the investors on this call, it's important, but not suddenly that we are buying a 15% share tomorrow or day after. It's not going to happen. We have agreed to acquire, and it will be staggered with several milestones over a few years or so. Okay. I think the press release mentioned two years, so that's why I was putting the number of 125,000,000 as a ballpark. So maybe that would be something I'll just look at again. Maybe the last question from my side was on I think in Q1, we mentioned that we're looking at a top end growth of 7% for this year. As first half has concluded, we are at 4%. So is there a possibility of still achieving that 7% number for this full year? Sorry. Could you repeat that question? Sorry. Could you repeat that question, please? Sorry. Yes. I was asking that I think at the end of q one, we are looking at a top line growth of 7% for this year. Now that the first half has concluded at a top line growth of 4%, is this something we can achieve in the remaining part of the year? Yes, I think we will continue to work on all the four revenue levers very clearly. And you have seen the RevPAR performance in the first half of around 3.9%. So that's number one. Number two is that the F and B is still an important part of our business, and that we'll continue to focus on. And this is the season time. And we have always said that while the wedding season should still be there, it should not kind of value. The third lever is the growth in management contracts, which I think first half the growth has been about 6% or so in terms of fees from management contracts actually, that's the third one. And the fourth is that the expressions, especially chambers has kind of picked up actually. And in fact, as we speak up to date, we have probably done about 20 crores or so in terms of chambers billings, which means it's at least a 15 crore addition to the bottom line. So therefore, we will work all the four levers. I think at this stage, don't want to sort of talk about a specific number at the end of the year, but suffice to say that we remain focused in terms of all the four levers of revenue growth actually. Sure. That's very helpful. I have more questions. I'll get back in the queue. Thank you so much. Yes. Yes. We will now take our next question. Participant, your line is open. Please go ahead. Hi, Sumant here from Motilal Daswal. Yeah. My question Hi, Sumant. Is Hi, sir. So so my question is regarding retail demand. So the post GST cut, how is the demand from the retail side? I think the retail is always strong. In fact, I think what we saw in the first half was that RevPAR growth, I mean, spoke about 3.9%. I think the impact was more for corporate and MICE actually. In fact, the transient customer has always been above 50%. So that's what I think the retail demand has been strong actually. In fact, that's been helping everyone actually. So as we grow occupancy, so you should assume that the retail demand continues to be strong. Okay. And we talked about the 8.7% room revenue growth. So how is the growth at stand alone in the room revenue side? And what is the breakup of OR and ARR? Yes. In stand alone, for the Q2, we had a very strong occupancy growth actually. In fact, occupancy in Q2 for stand alone was 68.2%, which is an up of about 4.3%. So occupancy growth is very strong. Clearly, it was rate was not rate clearly was down. Rate was down by about 4.5% or so. I think but we really drove through occupancies, and these are the big boxes. So I think that helped us a lot actually. And overall RevPAR growth was about 1.7% for Q2. For a standalone? Yes, yes. And that's an improving trend. I think if you look at this year, I think it's an improving trend overall for the industry. I think we saw the starting March, April, I think we have been gradually seeing improvements early. So therefore, I think Q2 trend is certainly an improving trend over Q1. In the stand alone, we have three properties, which are I think so is West End, Aguada and Holiday Village. And all three had certain rooms out of order because that was the time, right time to renovate them and upgrade them. So some CapEx movement was on there, but they have come back very strongly. So and are important drivers of growth in the second half, both Goa and Bangalore properties. So that means the performance of domestic subsidiary like PM has improved a lot? Yes. PM definitely has improved, actually. PM definitely has improved. Absolute. So when when we compare with the stand alone and then domestic subsidiary like PM, it's a the growth of a RevPAR might be two x? Right. Sorry. I didn't understand. Not really. It's not tourist, Sumant. It's the the our brand scape is changing so much that tourist destinations are there. We are still the strongest operator of resort properties, but our hotels are increasing every day in other destinations. So it's not just tourism. It's also a lot of business customer base that is increasing more rapidly as a percentage. That does not mean the number of tourists is not increasing or the number of tourism related business, domestic or international, both are on an increase, but business increase is higher. So my question is the PM RevPAR and Ginger RevPAR, is that two weeks of a stand alone business? Sorry. Sorry. Could you could you could you may maybe we should take that question offline, Subhan, because I think PM and Ginger are in I don't think we have to we can speak separately, Sumant. How how is the tax rate what is the tax rate guidance for FY 2020? For the tax rate guidance, let's say, have adopted the new tax rates, as you know, Sumant, and therefore, we will be at 25.1%. But however, because of some of the permanent differences we have due to U. S. Losses, we will be about 30%, 29 something. So under 30% is what we should assume. Okay. Thank you so much. We will now take our next question. This is Amit Agarwal, Nirvilbhan. I just wanted to have more update on this GIC platform. I think you just maintain said that one hotel has been included out there. Can you give us some idea of what's the outflow out there and how many hotels to be included in next probably year or so? So we are of course, there is evaluation going on for other multiple properties, both in terms of acquisition as well as monetization of some of one or two of our own properties. That evaluation is going on. Right now, all we have announced is that the first deal, small transaction, the first deal of an operating property, we have just concluded the commercial terms. And that is something we'll come back with greater details in about a month's time when things went more definite agreements are all done. But our outflow will not be more than 20%. It will be somewhere between 1520% CR, which is very, very nominal and would be offset with kind of a sale of a few other apartments. So that's what we have guided. We said whenever we monetize on noncore assets, that kind of amount will either go in bringing down the debt or in acquiring strategic assets with on the GIC platform or into a growth of our other levers in the system or solving one or the other issue that we have been carrying on for a long time. Sure. Second question, last question. I believe the foreign tourist arrival has dropped, I think it's about 2% to 3% against a lot more in the earlier periods. So firstly, are you feeling the pain? And secondly, what's the mix of foreign to domestic tourists or, let's say, guests in your hotels? Firstly, we are not seeing that kind of pain because luxury is a bit more resistant to drops like this. And most of those foreign tourists for us were coming in our palaces and iconic assets. I think there, are not we have not yet seen any kind of major drop in bookings in whether it's a Rambah or it's a Lake Palace or the Umir Bhavan or the Taj Palace in Delhi or Taj Mahal Palace in Mumbai or Lands' End. What we have definitely seen is the other way around. We've seen an increase in Delhi, and that is because pre elections and post elections, the government business had come to a standstill. And so you must have read and seen there are a lot of state visits which are happening, whether it's the, the royalty coming into, India from Sweden or Denmark or, you know, Holland, or it is heads of states like Chancellor Merkel or others. So I think those kind of visits are actually driving the government business, which was very much missing in the majority of the first half of this year. Sure. And last question, sorry. Just one more question. In the mix of your guests that you have, if I may broadly say, normally, would talk about the corporates, the OTAs and let's say, probably is very low. How has the mix changed in the last one year? I think the mix has largely been steady. See, I think the way we classify is that ADS, that is the OTAs and all that has been about 20%, 22%. So there is no real change in the OTAs actually. And the non negotiated customer, which is the transient as we call it, has been 50%, 52% or so. I think no fundamental changes at all actually. I think all we could say is that in terms of the growth because of the economic situation, we saw some down in corporate and MICE, but that was more than made up by the other segments actually, just fundamentally the transient. Corporate and MICE has been a bit weak to your mind in the Yes, of of course, which is expected. So I think but it will pick up now. It will pick up, yes. Sure. Thanks. That's all from my side. Yeah. We will now take our next question. Participant, your line is open. Please go ahead. Hi, Puneet. Giri, Sharlene Desai from UBS. Congrats on a great set of number. Interestingly, you know, your results are literally better compared to your competition both in terms of RevPAR growth and F and B growth. So congrats on that side. You know, one of your competitor made a comment that that they are able to or rather the resistance from the from the corporate in terms of price increase has come down. Are you also seeing that for you to take a risk? That is correct. Because I think what's happened is post the GST reduction from 28% to 18%, earlier we saw that there was some resistance in terms of increasing the rate of 7,500 because the guests would then pick up carpets, so then we have the higher plan, the slab actually. But with this coming down now and as we are getting into the cycle of negotiations, I think we certainly believe that the resistance is lower. And I think we'll be able to better update the status of negotiations maybe in a month from now actually. Clearly, this is a positive action. This is a positive. Great. Great. Just one one more thing. And do you have any sense, like, what is happening in the market in terms of the new agreement, like, market share in the new agreement, which are getting signed. So you have made a remark earlier that you are almost more than 50% of the market share in the new agreement. So any sense where we stand for the first half in the domestic market? We continue to dominate, actually. I think that is fair to We will not say 50% or whatever the right number is that some other analyst or research house should give the guidance. But I think Mhmm. I don't think there is any other group which has signed 36 agreements in last eighteen months. Yeah. No. That I agree completely with you on that. Right. What exactly is happening in the international property? It's bit of slowdown over there. Is it seasonal? No. Not at all. Actually, it's very thank you for raising that because while Giri was presenting and we said that there is a decline in international, the majority of that has been driven by three of our hotels in Sri Lanka in the first half, although Colombo is beginning to come back very strongly. It had a very strong October because we got a one off delegation, but it's following the terrorist attacks in April. Since we have three hotels in Sri Lanka and the downfall, for example, in Ventura was like 50% in that fall. So that percentage is intact. We have done quite well in both U. S. And London has been phenomenal for us. We mentioned that at the last quarter call also. And we see no reason why London will not continue to benefit despite all the Brexit discussions that are there. And we're actually adding some more value into London because we'll be opening chambers there within six months' time. We are adding a Chinese place there called House of Ming. We will be adding a all day dining. So so that's a property which is which is got great presence behind Buckingham Gate, and and we are investing actually more money into London. In terms of CapEx as the previous person had asked, actually, are spending more money in London, and we are earning very well in London. I think this is one of the best six months London has had for us. Right. Right. And the last bit, what kind of losses are we envisaging for for peer for this year? Any ballpark number? I think, see, if I look at the H1, I mean, which is quite visible, if you see the exception numbers that we show, the exception items for the first half, the peer clearly, because we provide for it, the loss came down by INR 6 crores or so, INR 32 crores to INR 26 crores. So therefore, the peer losses cash losses have come down definitely in the first half. I think last year, I think the cash loss was about probably around INR 64 crores, 65 crores actually. So this year, see about INR 60 crores. About INR 60 crores is what we anticipate in PR. But that's but that performance continues to kind of we continue to work on it to improve actually. Sure, sure. Great. That's it from my side. Thank you so much. We will now take our next question. Participant, your line is open. Please go ahead. Yeah. Thanks for giving me the opportunity. This is Prajeet Palakse from Sharkhand. Most of my questions have been answered. Sir, just on the operating performance, it would be really helpful if you help us to know what was the comparable improvement in the operating margins if you exclude the India impact? It's around for the quarter is around 150 basis points and for the first half of the year is double of that. How much is this? On a schedule on basis or a consult basis? So no. This is on a consolidated basis. Can you help me out with schedule on this also? One second, we can get you that number. So actually, we had two thirty basis points on the first half on consolidated basis. On stand alone, we have to verify the number for a second. I think it is around 30 basis points on stand alone. 30 basis points? For the first half? First half is. Sir. Okay. And First half. And the first half is 170. Okay. Okay. So we believe that, you know, this is despite the fact that, you know, first half is normally kind of, you know, 40% of the business, and we have achieved about 150 bps expansion in q two margins and two thirty bps in actual margins. So second half, we should expect much better in terms of operating margins on the competitive basis? I think The guidance which we have given is 800 basis points. We'll continue to deliver on that. We have delivered it in the last six quarters, and we will continue to deliver going forward. Thanks, sir. Sir, on the demand front, as you mentioned that October, November looks to be promising. And in terms of room rate increase, when do you expect exactly the room rate hike to happen in the industry, you know, from industry perspective? Not exactly from, you know, I think point of view, but from industry point of view, when do you expect a real room rate hike? Room rate increases. I think now that the occupancy increases strongly happened as we were discussing, I think as we get into the season, let's see, I think hopefully the room rate increases should start happening. And maybe as Puneet said earlier, let's wait till the November before we can talk in terms of what kind of room rate increases we get. I think we'll probably have time yeah. Last question possibly. Well, just last part of it. Yeah. We have the last question. We will now take our last question. Participant, your line is open. Please go ahead. My name is Prashant Chirsagar from Univate Corporate Research Private Limited. Thanks for the opportunity. I just wanted to your comment on the Middle East business of the company for the half year and the quarter. See, Middle East business of our company today is very limited. It's really just one property in Dubai, and that has been doing fairly well as a business leader in, is is a market leader in the business Bay Area. We are opening a second hotel in Dubai in December, as I said, the Jumeera Lake Towers. And a third one will open in Palm, at the Palm in Dubai by September, just before the expo commences in 2020. And a fourth one in Dubai Waterfront, Dera Waterfront in another few years. And then we are under development with a property in Makkah. So basically, that's what it is. The rates in Dubai are under pressure, but the volume is not. The occupancy levels are good. We have a very good F and B revenue base in Dubai. So our total revenue increases there despite a decline in the average rates in the Dubai market in general and also business base seeing a lot of supply growth. So in particular, in business based, there has been severe pressure on rates, but we continue to do well. More importantly, it's a different contract where we have a very happy owner. Okay. One more question is your Paj Lands expansion plans have been held up by the one of the government permissions. So can you help us with the what is the status of that? I think you mean SeaRock and not Landscape. Yes. As we have disclosed today, we have a plan to acquire the shares of the SeaRock so that we are a 100% owner, then we will do the architectural planning, go for full planning permission. And then once we have all that, then go for construction. But this is not like a one year or a two year project. The good thing is that we have the framework approval. Now we have to negotiate and close the agreements with our 15% shareholder. And if we start today, the day it would open is earliest as five years. K. So so it's a long term project and also needs support from the local government and the planning with the ceiling, etcetera. You know, the all the traffic planning also has to happen. Otherwise, if you just build another hotel out there, which is very large, it will the roads will not be able to take the traffic. So so all this will happen in tandem. The initial discussions have been going on. I think it will be good for the city. It will be good for the country. And, but it's not a project where we can report every quarter what is happening. It's a it's a it's a two year planning process as we have disclosed. And after that, another three years to build it. That's the only that if not if not a a bit longer. Sir, just a question then. Have you got all the permissions from the government for the project? That's what I was asking. How can we go for all the permissions? You go for the permissions and spend the money on architecture and planning once you have cleared all the shareholdings. So we have had the shareholding. We have had the land. Now we will start after we have definitive agreements with the shareholder when we control the property 100%, then we will start the development and planning process. Okay. Thanks a lot. That answers my question. So there are no further questions at this time. I'm handing over the back the call back to you, sir. Yes. Thank you so much for participating in the call today. I think and for those if there are any further questions, Nitin and I would be able to take the questions offline actually. Thank you so much. This concludes today's call. Thank you for your participation. You may now disconnect your lines. Thank you.